BY Fraser Tennant
In yet another bankruptcy related to the impact of coronavirus (COVID-19) on oil producers and the companies that rely on them for business, sealing product manufacturer Utex Industries has filed for Chapter 11.
The filing will be followed by a balance sheet restructuring intended to reduce Utex's funded debt by approximately $700m and provide it with up to $42.5m in new financing. The process is expected to be completed in a matter of weeks.
Utex’s plan is supported by over 81.6 percent and 90.4 percent of its first and second lien lenders, respectively. Utex’s lenders have also agreed to provide Utex with debtor-in-possession (DIP) financing and the consensual use of cash collateral to enable the company to operate its business in the ordinary course.
“After an extensive analysis of strategic and financial options for the Company, and after months of negotiations, we are very pleased to have reached an agreement for a consensual restructuring with our secured lenders and other stakeholders,” said Mike Balas, chief executive of Utex. “We believe that the restructuring contemplated by the Agreement will provide us with the capital structure and liquidity to compete and grow in today's business environment.”
A market-leading manufacturing business headquartered in Houston, Texas, Utex operates manufacturing, distribution and technical sales facilities in the US and abroad and has approximately 500 employees. The company supports a diverse customer base in the oil & gas, industrial, mining, and water end markets.
Throughout the Chapter 11 restructuring process, Utex expects to continue to operate its business without disruption to its vendors, customers, employees or other partners, and, subject to customary approvals, will have access to substantial liquidity to meet its obligations. This includes funding employee wages and benefits, and paying vendors and suppliers for all goods and services.
Mr Balas concluded: “I am grateful to our dedicated employees who have continued to work hard in this challenging business environment, and this restructuring will position us and our partners for success in the years to come.”
News: Utex Industries to Shed $700 Million Debt Through Chapter 11 Bankruptcy